JDS Uniphase to Acquire SDL for $37 Billion

N E W  Y O R K, July 10, 2000 -- Acquisitive JDS Uniphase Corp., trying to meet booming global demand for fiber-optic equipment,said today it was snapping up SDL Inc. for about $36 billion in stock, beating out rivals to forge the largest takeover of a technology equipment maker on record.

The acquisition was originally valued at $41 billion when thecompanies announced it early today, before investors sent sharesof JDS Uniphase down 13 percent.

JDS Uniphase only last month completed the purchase of E-TekDynamics, which also makes fiber-optic network equipment, for $15billion.

JDS Uniphase and SDL each manufacture products needed forhigh-capacity fiber-optic networks, which allow for increasedtelecommunications traffic. Demand for such products is growing ashigh-speed audio and video transmission become more prevalent onthe Internet.

Under the terms of the deal announced today, each share of SDLwill be exchanged for 3.8 shares of JDS Uniphase. At Friday’sclosing prices, that would represent a 49 percent premium for SDLshareholders.

Investors reacted by pushing shares of JDS Uniphase down $15.063to $101.125 in trading on the Nasdaq Stock Market, whileshares of SDL rose $25.375 to $320.688.

An Internet Play

“This combination brings together world-class technical andmanufacturing teams that promise to deliver best-in-classproducts at increased volumes for today’s systems whiledeveloping solutions for tomorrow,” said SDL chief executiveDon Scifres.

“We also expect to enable the migration from today’s hybridintegration and module level products to tomorrow’s trulyintegrated system on a chip,” he added.

SDL makes optical equipment for fiber-optic networks tocarry exploding volumes of Internet traffic. The phenomenalgrowth of this market has already created market stars likeCisco Systems and Nortel Networks Corp.

Said JDS CEO Jozef Straus: “By now we all know that theInternet is taking over the world and what that means about theneed for bandwidth. Optical is clearly the only solution and ourcustomers are building tomorrow’s systems, need higher levels ofintegration and more complex products every day.”

Approvals Required for Deal

The union is expected to close by December, pendingshareholder and regulatory okays, including key U.S. JusticeDepartment approval, JDS said.

The Justice Department asked forfurther details when JDS bid in January for E-Tek Dynamics, but the deal ultimately wonapproval.

“I believe that this is a transaction that will servecustomers well and we believe that the regulatory authoritieswill come to that conclusion, although we can’t predict thetiming in a regulatory review situation,” said Anthony Muller,JDS’s chief financial officer in a telephone interview.

After the deal is completed, SDL willoperate as a wholly owned subsidiary of JDS Uniphase.

San Jose, Calif.-based SDL, which has about 1,700 employees,earned $14 million on revenue of $72 million in the three monthsended March 31. JDS Uniphase, with offices in San Jose and Nepean,Ontario, has about 17,000 employees. During the first quarter of2000, it lost $241 million on revenue of $395 million.

JDS is one of the biggest of a tier of so-called“merchants” or independent component manufacturers that serveand compete against companies such as U.S.-based LucentTechnologies, Canada’s Nortel and France’s Alcatel, which inturn supply telecoms companies. The Associated Press and Reuters contributed to this report.